Entrepreneurial Tips

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How much does it cost to start a company? Everyone has read the magazine articles about the newest millionaire who started his business with $5 and a roll of duct tape. It makes for good airplane reading. But in reality the amount of money you need to start a business highly depends on what type of business you are looking to build.

Service-based Businesses: $0. All you need is a dress shirt and maybe a printer. If you want to start a consulting business, a concierge business, a logo design or web development business, a housecleaning, staffing, accounting, or legal practice business, all you need to do is be qualified to start selling your services. You will probably also need a computer.

Web Business: $1000 - $20,000. The cost of creating a website or web-based business will continue to drop as developers create cheaper and cheaper applications that enable you to start selling something. You can develop a personal brand and an online shopping cart for around $1,000 - $2,000. You can start a networking site like facebook or linkedin for around $5k - $10k. You can even begin selling web-based software for $20k - $50k; if you find a strong niche. And prices will continue to fall.

Storefront Business: $40k - $200k. Franchises, Cafes, and Retail Outlets are a more concrete type of start-up (compared to web businesses or R&D operations). I know some people that started the right type of franchise; and expanded to dozens of locations in 2-3 years- if their finances look good.

Real Estate: $50k - $1m. Buying and selling real estate; and renting that space to tenants- is an accessible way to start a business and earn passive income, without needing to reinvent the wheel. Real Estate is a proven tactic for passive income and occasionally a way to double your money in less than a year.

Software and IT: $50k - $20m. Software, IT, Science, Medicine- these industries demand large-scale innovation; and now you start running into venture capitalists that will invest $30 million in your company; and expect your company to earn over $300 million within 10 years. At this stage; you better have an all-star team, idea, financial projections; and hopefully revenues.

Finance: I have some friends who are starting hedge funds; and I have no idea how much this costs or how they do it. Many finance start-ups are just service-based start-ups; like accounting of financial planning. But hedge funds, banks, stock brokerage firms- I have a feeling you need some real financial muscle.

All things said; there are thousands of multi-million-dollar companies you can start now for less than $5k. At least, that’s my philosophy.

Come to a meeting in flip-flops and your soon-to-be ex-clients will not be impressed. Why? Because you’re not going to the beach with them. You expect your clients will respect you, right? So why shouldn’t you respect them in turn?

Dressing well is only half the battle, though. Remember that the people you and your team will be meeting with regarding your start-up are just as excited about new ideas as you are. They too are entrepreneurial, and eager to get on board with a new venture if they think it will be successful. The fact that they are meeting with you in the first place means that you’ve managed to convince them that you are a passably competent start-up.

So don’t screw it up. Be confident and collected in your meeting. Don’t check your watch or “cut to the chase.” Have nice-looking business cards. Have a nice website (see tip #3). If you don’t know how to answer a question, say “That’s an interesting question that I haven’t considered. I’ll look into that” instead of simply “I don’t know.” The important thing is that you seem cool, rational and present yourself as an exciting potential business partner.

If you act the part, you are the part. There was a story recently about how Fox News labels people as “political analysts” or “experts” who are analyzing on television for the first time. Their labels are all about the image they present as the authority in the matters they report on. In business, you can do the same thing. You don’t have to lie, but you can present an image of success just by acting like you’ve got it.

If you act like a hot start-up, you are a hot start-up. Keep your image polished, and as long as your business is making money, you will attract lots of attention.

I spend about 3-5 hours a week searching for and buying domain names. Sometimes its utterly frustrating, and other times its the joyous hours of a start-up when the team resonates on the vision and brand identity. I use instantdomainsearch.com and bustaname.com to accelerate my domain searching.

I am no expert on choosing brands- but I have some guidelines that will help you hone down on your best domain.

1. Don’t just spin off another site’s domain. No more mynannyspace.com, freeamazon.com, bloogle.com- traveling too close to a famous brand makes you look like a cheap clone.

2. Don’t use more than 2- maybe 3- words in a single domain. Count your syllables. hotdogstands.com passes; favoritebooklistschicago.com fails.

3. You can make up words (”Google doesn’t mean anything” has been told to me at least once a week) but be careful. Made-up words are often hard to remember- hard to spell- or hard to pronounce. I owned agavian.com, izmus.com, and many other domains that are painful to spell over the phone. “Go to a-g-a-v-i-a-n dot com”

4. Google any domain you are thinking of buying. If streamlineglobal.com is available; but there is already a large brand in your industry called “streamline”, stay away. You don’t want people google searching your name and finding a competing site.

5. Don’t be afraid to spend $1k - $2k on buying a hot domain. See buydomains.com. You would be surprised how far $2k will go with domain buying.

6. Create your own culture. The logo design, your colors- icons- and layout- they can give your domain culture; think about what your domain will look like as a brand.

7. Explicitly state what you do. This seems obvious- but its often overlooked. If you let people pay for stuff with their iphone; call yourself paybyiphone.com. It works.

8. Don’t confine your brand by geography or industry if you have plans of scaling. You can’t launch chicagodaycare.com in san francisco.

9. Only buy dot coms. Dot net, dot us, dot org, etc- they are transparently second tier- and everyone will go to the dot com by accident. The only exception is to work your extension into your name, like del.icio.us

10. Toss the name around. Sometimes a friend needs to tell you your domain is bad. I will admit I’m better at finding professional domains than fun domains.